INDAG RUBBER LIMITED Safety & Reliability Mile After Mile...

Transcription

1 INDAG RUBBER LIMITED Safety & Reliability Mile After Mile... Investor Presentation Q2 FY18 November 2017

2 Safe harbor This presentation and the accompanying slides (the Presentation ), which have been prepared by Indag Rubber Limited (the Company ), have been prepared solely for information purposes and do not constitute any offer, recommendation or invitation to purchase or subscribe for any securities, and shall not form the basis or be relied on in connection with any contract or binding commitment whatsoever. No offering of securities of the Company will be made except by means of a statutory offering document containing detailed information about the Company. This Presentation has been prepared by the Company based on information and data which the Company considers reliable, but the Company makes no representation or warranty, express or implied, whatsoever, and no reliance shall be placed on, the truth, accuracy, completeness, fairness and reasonableness of the contents of this Presentation. This Presentation may not be all inclusive and may not contain all of the information that you may consider material. Any liability in respect of the contents of, or any omission from, this Presentation is expressly excluded. This presentation contains certain forward looking statements concerning the Company s future business prospects and business profitability, which are subject to a number of risks and uncertainties and the actual results could materially differ from those in such forward looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, competition (both domestic and international), economic growth in India and abroad, ability to attract and retain highly skilled professionals, time and cost over runs on contracts, our ability to manage our international operations, government policies and actions regulations, interest and other fiscal costs generally prevailing in the economy. The company does not undertake to make any announcement in case any of these forward looking statements become materially incorrect in future or update any forward looking statements made from time to time by or on behalf of the company.

3 About Retreading

4 Retreading Retreading is a technology where the old tyres are made serviceable by removing worn out and damaged treads and replacing it with new treads COLD PROCESS HOT PROCESS Precured rubber of high density & available in various tread designs is lined with cushion gum before applying to a buffed casing Curing is done in a pressure chamber at low temperature 100 C & pressure Uncured rubber is added to a buffed casing & cured in the mold at temperatures of approximately 150 C-160 C This temperature allows uncured rubber to flow in the matrix forming the tread design during vulcanization COLD Retreading Industry 67% Orgainsed, 50% 20%-25% share Un-organised, 50% HOT Retreading Industry 33% 4

5 Retreading Process Final Inspection & Painting Curing by Chamber Building Tread Rubber Enveloping & Rim Mounting Buffing Cementing and Filling Repairs & Skiving Initial Inspection Collection of Casings 5

6 Benefits of Retreading 30%-50% of the price of New tyre with life nearly the same as New tyre 02 In retread tyre only 25% Natural rubber is used whereas; in new tyre around 80% of Natural rubber is required 04 Appropriate tread can last nearly the same as new tyre 06 SAVES MONEY LOW COST - PRODUCTION DURABLE LOW INVESTMENT SAFETY RECYCLE ENVIRONMENT FRIENDLY Only required on the part of the retreading plant (no expensive moulds) Tested to same stringent performance criteria as new tyre Extends the life of used tyres thus saving even more energy, CO2 and raw materials with each product cycle Requires ~7 gallons of crude oil to produce a retread as opposed to 22 gallons of oil to manufacture a new tyre 6

7 Business Overview

8 Company Overview

9 History Incoporated as JV between Khemka Group & M/s Bandag Inc, (USA) Set up plant at Bhiwadi (Rajasthan) Listed on BSE Increased capacity at Nalagarh plant from 6000 MT to MT Foray into Foreign market with launch of Zoma Brand Expanded Capacity from 13,800 MT to 20,000 MT JV was terminated with Bandag Khemka Group took over 38.3% share Set up plant at Nalagarh (Himachal Pradesh) Introduced Max Mile Brand in Indian Market Included as one of the best Under 1Bn company by Forbes Asia Certificate of Excellence from Inc 500 in 2012 &

10 Products UN VUNCUNIZED RUBBER STRIP GUM Capacity of 1,800MT Bonding gum for curing process Specifically manufactured to provide longer shelf life UNIVERSAL SPRAY CEMENT Capacity of 1,800KL Solution available in Ready to use and Thick forms PRECURED TREAD RUBBER Capacity of 20,000 MT Radial and Bias Range ENVELOPE Various allied products and spare tools used in retreading units/shops Range from Passenger to Truck/Bus Tyre OTR & Tractor 10

11 Focused Management Mr. Nand Khemka Chairman & Managing Director Mr. K K Kapur CEO & Whole Time Director M.S. in Foreign Trade & MBA in Production Management from the Columbia University, New York, U.S.A. Over 40 years of experience in promoting and running successfully various organizations With the company since 2001, served as the CMD of GAIL & MD of Enron India (NG) until 1998 Post-graduate in Mathematics Member of the Institute of Cost and Works Accountants of India with over 47 years of experience Mr. Uday Khemka Director Mr. Shiv Khemka Director Son of Mr. Nand Khemka having more than 24 years of Investment Banking & Entrepreneurial experience in Emerging markets Vice-Chairman of the SUN Group of companies Vice Chairman of SUN Group, founded in the early 90 s Educated at Eton College, Brown University, and the Lauder program at The Wharton School, University of Pennsylvania 11

12 Focused Management Ms. Bindu Saxena Non Executive Director (Independent) Mr. P R Khanna Non Executive Director (Independent) Mr. R Parameswar Non Executive Director (Independent) Mr. Harjiv Singh Non Executive Director (Independent) Mr. J K Jain Chief Finance Officer Mrs. Manali D Bijlani Company Secretary 12

13 Manufacturing Facilities Single State of the art manufacturing unit Located at Nalagarh Industrial Estate in Himachal Pradesh Advanced Technology in terms of machinery and equipment's Modern Retreading Cum- Training centre to impart high quality Brand Indag, Zoma & Maxmile Use superior raw material and pressed at a high pressure that gives high performance product both in term of mileage and tread life Only company who uses curing temperature of 99 C than others who cure at higher temperature of o C Continuously R&D to develop superior compounds & enhance operational efficiencies 13

14 Flow of Business Fleet Owners Run the Vehicles Treads get Worn after certain Usage Buy new Tire Retread the same Old Tire Manufactures & Supplies the Best Quality with Reasonable Pricing Retreading Products to Retreaders If Cost of New Tyre is Rs. 100 Savings 50-70% Cost of Retreaded Tyre Rs

15 Key Strengths & Opportunities

16 Our Key Strengths STRONG DISTRIBUTION NETWORK We have a PAN India Presence with over 25 depots INNOVATION TRAINING IMPARTED Training imparted by Engineers who has unique qualifications of Retreading to achieve Highest standards of Quality while re-treading COST EFFICIENCIES Innovations & Invention of Different Recipes & Patterns Cost Efficiencies have been maintained throughout thereby improving our Margins. STRONG FINANCIALS We have a Strong Balance Sheet with zero Debt having High ROCE EXPANDED CAPACITIES We expanded our capacities from 13,800 tonnes to 20,000 tonnes. This helps us to be ahead of the curve 16

17 Strong Distribution Network PAN India Presence Retreaders Dealers 25 Depots PAN India basis Map not to scale. All data, information and maps are provided as is without warranty or any representation of accuracy, timeliness or completeness. 17

18 Training Retreaders Retreaders also get after-sales Training imparted by Engineers who have long experience of retreading under experts To achieve Highest standards of Quality while re-treading and support services Training Centre Safety in all areas & High Standard Products & Service Delivery Marketing the Product & Differentiating from Others Problem solving and helping with the machinery issues Logistic & warehouse support 18

19 Capacity Expanded Addition Existing Added Capacity in order to be ahead of the curve 20,000 6,200 13,800 8,950 4,850 2,000 3,500 1,500 2,000 6,550 3,050 3,500 2,400 6,550 8,950 13, Capacity expansion of 6,200 MTPA is on stream from Q1 FY17 Capex spent of Rs. 7 crs. on Brownfield Expansion 19

20 Opportunities Increase in Commercial Vehicle Sales especially the MHCV segment Improving roads and support infrastructure Implementation of GST will narrow the pricing difference between the organised and the un-organised Increase in Radialisation in CV segment Reduction in influx/dumping of Chinese tyres in India after demonetization Will further reduce post GST Implementation 20

21 Increase in CV Sales CV Production Trends 832, , , , ,298 As Industrial Activity Picks up More Demand for Commercial Vehicles for Movement of Goods More Tires worn out Retreading done on Tires IIP Growth Rate 2.8% 2.4% FY13 FY14 FY15 FY16 FY17 CV Domestic Sales Trends -0.1% FY14 FY15 FY16 793, , , , ,169 Retreading Industry Picks up with Lag effect Large Opportunities for Retreading Business in coming years FY13 FY14 FY15 FY16 FY17 Source: SIAM 21

22 Increase in Radialisation Radialisation in Truck & Bus % 44% 53% 60% 67% 72% 77% Radialisation requires: Better Road conditions, No overloading & Proper Maintenance of Vehicles Better Road Conditions - Faster vehicles, running on radials will consume tyres more frequently, narrowing the gap in retreading time by covering larger distances in shorter durations % 17% 19% 22% 26% No Overloading & Proper Maintenance of Vehicles Will help to reduce Casing Failure, which is precondition for Tire Retreading 5 0 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E FY20E FY21E Source: JK Tyre Presentation 22

23 GST - A Game Changer Retreading was dominated by Unorganised Players Slow Shift towards Organised Pricing Difference in Pricing between Organised and Unorganised is mainly due to taxes GST implementation would result in removal of different taxes and result into level playing field for both the players Quality Precured Tread Longer Life of Tire As Radial Tires are Expensive Demand for Quality Product is on rise Quality Company Offers - Best Quality with Reasonable Pricing 23

24 Financial Highlights

25 CEO s Message Commenting on the Result, Mr. K. K. Kapur CEO, Indag Rubber Limited said, I am happy to announce that our Company reported Topline of Rs. 42 crores with EBITDA and PAT of Rs. 6.3 crores and 3.8 crores respectively in the second quarter of the year. Post implementation of GST, there has been a visible shift from unorganised sector to the organised sector. During the quarter we have seen an uptick in volumes as compared to the last quarter. There has been an imposition of anti-dumping duty on import of truck and bus radial tyres to restrict imports of cheap tyres from China thus enhancing the demand of domestic tyres leading to an increased demand of retreading too. Tyre volume demand is expected to grow by 7-8% during FY18 and FY19, boosted by higher OEM demand and stable replacement demand. Demand for the truck and buses tyres is likely to pick up in H2 FY18. The business is gradually coming back to normalcy

26 Financial Highlights Q2 FY18 Revenue EBITDA* Profit after Tax +15% +109% +147% Q1 FY18 Q2 FY18 Q1 FY18 Q2 FY18 Q1 FY18 Q2 FY18 Rs. Crs. EBITDA Margin* (%) PAT Margin* (%) bps 14.9% bps 8.9% 8.2% 4.1% *incl. Other Income Q1 FY18 Q2 FY18 Q1 FY18 Q2 FY18 26

27 Financial Highlights Q2 FY18 Particulars (Rs. In Crs) Q2 FY18 Q1 FY18 Q-o-Q Total Revenue from Operations Other Income Total Revenue (incl. Other Income) % Raw Material Gross Profit % Gross Profit % 38.5% 30.4% Employee Expenses Other Expenses EBITDA % EBITDA % 14.9% 8.2% Depreciation EBIT % EBIT (%) 13.0% 6.3% Finance Cost Profit before Tax % Tax Profit after Tax % PAT % 8.9% 4.1% Other Comprehensive Income Total Comprehensive Income % EPS On Standalone Basis 27

28 Balance Sheet Liabilities (Rs. Crs.) Sept - 17 Equity Share Capital 5.3 Other Equity Total Equity Non Current Liabilities Deferred Tax Liabilities (Net) 4.2 Total Non Current Liabilities 4.2 Current Liabilities Trade Payables 16.1 Other Financial Liabilities 2.4 Provisions 0.9 Current Tax Liabilities 0.5 Other Current Liabilities 1.8 Total Current Liabilities 21.6 Total Equity and Liabilities On Standalone Basis Assets (Rs. Crs.) Sept - 17 Non Current assets Property, Plant and Equipment's 29.7 Capital Work-In-Progress 0.0 Other Intangible Assets 0.2 Investments 84.2 Loans 0.1 Other Financial Assets 0.8 Income Tax Assets 0.2 Other Non-Current Assets 0.2 Total Non Current Assets Current Assets Inventories 30.7 Investments 15.9 Trade Receivables 28.2 Cash and Cash Equivalents 2.0 Bank 1.6 Loans 0.3 Other Financial Assets 5.1 Income Tax Assets 0.6 Other Current Assets 3.2 Total Current Assets 87.6 Total Assets

29 Consistent Dividend Pay-out Dividend Pay-Out 19% 15% 17% 19% 19% 20% 29% FY11 FY12 FY13 FY14 FY15 FY16 FY17 EPS DPS The Board has approved Interim Dividend for the Financial Year of Rs. 0.90/- per equity share of Rs. 2/- each (45%) *Adjusted EPS & DPS for the split 29

30 For further information, please contact Company : Investor Relations Advisors : Indag Rubber Ltd CIN: L74899DL1978PLC Mr. Anil Bhardwaj, G.M. (Finance) anil@indagrubber.com Strategic Growth Advisors Pvt. Ltd. CIN: U74140MH2010PTC Ms. Neha Shroff / Mr. Deven Dhruva neha.shroff@sgapl.net / deven.dhruva@sgapl.net /